Defense Contractor to Pay $1 Million in Fraud Case

A defense contractor has agreed to pay $1 million in fines and damages for selling the government critical bomb components that employees knew were defective, a prosecutor said Tuesday.

Allied-Signal Inc., parent company of Courter Operations of Boyne City, Mich., agreed to the settlement after a three-year investigation resulting in conviction of seven ex-Courter employees, U.S. Atty. John Smietanka said.

The company, which also is parent company of Bendix Guidance Systems, agreed to pay the government $1 million to resolve its liability under the False Claims Act for possible fines and damages, Smietanka said in a statement.

The payment was received April 4 and the case was closed, he said.

The Defense Department probe began after Courter employees were reported to have routinely falsified test data to hide instances in which critical aviation components failed to meet quality standards.

In a May, 1986, court-ordered search of Courter testing records, Air Force investigators found that about 1,500 defective or substandard sophisticated gyroscopes had been sent from Courter to Texas Instruments Inc., to be placed in Air Force laser-guided glide bombs.